While the international community supports Turkish efforts to fight terrorism it must do so "while respecting the rule of law, observing regional peace and refraining from taking any disproportionate action," said EU Enlargement Commissioner Olli Rehn.

Turkey made it clear earlier Tuesday that it retained the option of military action against Kurdish rebels in Iraq, a day after talks between Turkish Prime Minister Recep Tayyip Erdogan and US President George W. Bush.

The Turkish government has come under immense public pressure to crack down on rebel PKK bases in northern Iraq after the separatists significantly stepped up their attacks.

Tensions on the Iraqi border increased after October 21 when PKK rebels Turkey says came from northern Iraq ambushed a military unit, killing 12 soldiers and capturing eight others. The captives were subsequently released.

Rehn was speaking as the European Commission published its annual report on Turkey's progress towards EU membership.

The EU's executive arm urged Ankara to press ahead with key political reforms after limited progress this year.